Stamp price hike will have 'disastrous' effect on elderly and vulnerable

Plans to raise the price of stamps are likely to have a "disastrous"
effect, with the elderly and the vulnerable - as well as small businesses -
among the worst hit, according to an MP leading a Commons probe into the
proposals.

Scam letters are a pest to some older and more fragile people who believe they are bound to win a large prize if only they keep buying things they do not need or want. Photo: GETTY

Royal Mail wants to increase the cap on the cost of second class stamps from 36p to 55p from April while under the plans there would be no limit on the price of a first class stamp, currently 46p.

MPs on the Business, Innovation and Skills committee have announced an inquiry into the move and are today taking evidence from postal regulator Ofcom as well as Consumer Focus, the watchdog.

Adrian Bailey, chairman of the committee, told BBC Radio 4's Today programme that Royal Mail had already been losing volume of mail and any price increase was likely to "accelerate that process" and have a "disastrous" impact on its finances.

Mr Bailey said that it was not the role of the committee to interfere with or try to "micro-manage" the company.

But he added: "I think that certainly we will be questioning whether a potential 53% increase in the second class stamp and an uncapped increase in the first class stamp will have anything other than a disastrous impact on traffic.

"The people who will be hit wll be the elderly, the vulnerable, and those on low incomes, but also small businesses as well."

He said that while some businesses could obtain discounted rates for sending high volumes of mail, individuals as well as many smaller firms did not send enough to qualify for them so would be adversely affected by the price hike.

Royal Mail proposed the increase last month, after Ofcom suggested in October that restrictions on the level at which it sets the price of stamps could be lifted.

The company has insisted that there was “no affordability concern” about such a steep rise.

Consumer Focus has said that given the scale of the increase “it would pay for customers to stock up now” on books of stamps. Downing Street has insisted any price rise had to be “affordable”.

A Royal Mail spokesman said: “Royal Mail is awaiting the outcome of Ofcom’s consultation on its proposals for future regulation of UK postal services before announcing stamp prices for 2012.

"No final decisions have been made on stamp prices. We will of course inform customers of any changes to stamp prices as soon as we are able to."